Salary & Tax

How take-home pay is worked out

Take-home pay is what remains after three kinds of deduction. First come pre-tax items such as pension contributions, which reduce the income that tax is charged on. Then comes income tax itself, charged in slices at different rates. Then payroll taxes: Social Security and Medicare in the US, National Insurance in the UK. The gap between gross and net is often bigger than people expect — a single US worker on $100,000 keeps about $79,000 of it after federal income tax and FICA, before state tax takes its share.

Marginal rates: the idea most people get wrong

Tax brackets apply to slices of your income, not to all of it. In the US in 2026, a single filer pays 10% on the first $12,400 of taxable income, 12% on the next slice up to $50,400, and so on up the scale. Moving into a higher bracket only taxes the income above the threshold at the higher rate — a pay rise never leaves you worse off. The same slice-by-slice logic applies in the UK, where the 40% higher rate only touches income above £50,270. Your marginal rate is the rate on your next dollar or pound; your effective rate — total tax divided by total income — is always lower.

US vs UK: two very different systems

The US taxes you at federal level and, in most states, at state level too, and you file a tax return each year to settle the difference. The standard deduction — $16,100 for single filers in 2026 — is subtracted before any bracket applies. The UK instead deducts tax at source through PAYE, so most employees never file a return at all: your employer applies your tax code, takes Income Tax and National Insurance from each payslip, and the tax year runs from 6 April to 5 April. The UK's tax-free Personal Allowance is £12,570 for 2026/27, and employee National Insurance is charged at 8% on earnings between £12,570 and £50,270, then 2% above that.

From hourly wage to annual salary

To convert an hourly rate to a yearly salary, multiply by 2,080 — 40 hours a week for 52 weeks. So $25 an hour is about $52,000 a year, and £15 an hour is about £31,200 a year. If you take unpaid time off, use your real working hours instead: 48 working weeks a year turns $25 an hour into $48,000. Our hourly-to-salary calculator does the arithmetic both ways, including overtime and part-time hours.

Salary and tax tools

• US Salary Calculator — federal + state take-home pay per pay period, from salary or hourly wage.
• UK Salary Calculator — take-home pay after PAYE Income Tax and National Insurance.
• Hourly to Salary Calculator — convert between hourly, weekly, monthly and annual pay.

Guides

• UK Take-Home Pay Explained 2026/27 — how Income Tax, National Insurance and the Scottish bands shape your monthly pay.

Also useful: our US tax brackets 2026 vs 2027 tables and UK take-home pay table show the exact figures behind the calculations.